President Obama Delivers 2013 State of the Union Address; Highlights Many SEMI Priorities

President
Obama Delivers 2013 State of the Union Address; Highlights Many SEMI Priorities

By Jamie Girard, senior director, Americas Public Policy, SEMI

On
February 12, 2013, President Barack Obama appeared before a joint session of
Congress to deliver the annual State of the Union address. Although all such speeches are important and
influential, this particular speech marks the first such opportunity for the
President to lay out the vision for his second term to Congress and the nation. With the 2012 election only recently behind
us, the “clock is running” as pundits are already talking about 2016. President
Obama has a narrow window in which to try and make a meaningful mark in his
second term before the proverbial “lame duck” label becomes attached to him,
weakening his clout and ability to push forward his legislative agenda.

With
this in mind, the President laid out a positive agenda that hit many of the
issues about which SEMI members are concerned.
Increasing US manufacturing was a central theme of the speech, with
other important issues like federal funding of research and development,
corporate tax reform, solar energy, high-skilled immigration reform, and trade
given air time as crucial priorities for the second term.

Manufacturing

“Our first priority is
making America a magnet for new jobs and manufacturing… I ask this Congress to
help create a network of 15 of these [manufacturing] hubs and guarantee that
the next revolution in manufacturing is made right here in America…Now is not
the time to gut these job-creating investments in science and innovation. Now is the time to reach a level of research
and development not seen since the height of the Space Race. We need to make those investments.”

The
President’s commitment to expanding American manufacturing and supporting high
tech and innovative industries is of special note to SEMI. With 40 percent of the world’s semiconductor
equipment being manufactured in the U.S., it’s important that the federal
government compete with the incentives that are offered by other countries
around the world. Innovation has always
been strength in America, and Obama National Network for Manufacturing
Innovation (NNMI) looks to partner public funds with private industry and
academia to support innovation for the future.

SEMI
supports the President’s efforts, and is actively supporting efforts in the US
Congress to pass legislation that will allow the opening of up to 15 centers to
bring new industrial innovations out of the R&D phase and into full commercialization. Manufacturing is critical to GDP growth in
the U.S., and is one of the most labor intensive pursuits available in ability
to create and sustain jobs. SEMI member
companies have long been a positive example of great American manufacturing and
believe that the federal government should do more to support these endeavors.

Tax Reform

“Now is our best chance
for bipartisan, comprehensive tax reform that encourages job creation and helps
bring down the deficit.”

SEMI
supports comprehensive corporate tax reform as a way to make doing business in
the U.S. more attractive for SEMI members.
As such, SEMI’s North American Advisory Board has approved a set of tax
reform principles that they believe should be the guidelines for any corporate
tax reform effort. These three
principles are:

1)
Lower the top corporate tax rate from
35 percent: The U.S.
corporate tax code should be lowered to be more competitive with other
developed nations. The U.S. now has the
highest corporate tax rate of any developed nation, putting America at a
distinct disadvantage when it comes to business investment in our country. SEMI would like to see the top corporate tax
rate reduced to be closer to the average rate of 25.1 percent, which is
essential to changing to the way tax rates factor into company decisions to
invest in this country.

2)
Retain tax incentives which promote
innovation: While
SEMI would support the elimination of certain tax exemptions in return for
lower rates, we also believe that the U.S. must continue to support American
innovation as a fundamental driver of our economy. SEMI members thrive in an intense research
and development environment. Typically, our members invest 10-15 percent of
their revenues back in R&D each year to keep up with the latest improvements
that are demanded of them by the fast pace of innovation in the
microelectronics industry. We believe
that it is in the country’s best interest to ensure the availability of
incentives which prioritize research and development as an important economic
driver. Currently, the R&D tax
credit acts as such an incentive, and so we support it being made permanent, or
in its place a policy of equal strength to promote American innovation.

3)
Shift to a territorial tax system: Finally, the current American system
is an outdated relic of a past in which the U.S. was the only dominate global
business center. Time has changed the
way that companies do business, and that should be reflected in our tax code. Moving to a territorial tax system that is
more in line with the way the rest of the world taxes business will make the
U.S. a better place for corporations to be headquartered, and therefore create
increased economic activity

Solar PV

“Solar energy gets
cheaper by the year — let’s drive down costs even further. As long as countries
like China keep going ‘all in’ on clean energy, so must we.”

While
the Solar PV industry has seen its share of challenges, the market has
continued to expand. The U.S., thanks to
SEMI member companies, has a strong supply chain in both equipment and material
for PV. There remains much promise in
PV, and it’s important the federal government compete with the dominant players
in Europe and Asia for a share of this market.
That’s why SEMI continues to advocate for supportive solar policies like
the Advanced Energy Investment Tax Credit (ITC), and for newer legislation like
the Master and Limited Partnership Parity Act, which levels the playing field
for investment in solar with oil and natural gas.

High-Skilled Immigration
Reform

“Our economy is stronger
when we harness the talents and ingenuity of striving, hopeful immigrants. And right now, leaders from the business,
labor, law enforcement, faith communities — they all agree that the time has
come to pass comprehensive immigration reform…And real reform means fixing the
legal immigration system to cut waiting periods and attract the highly-skilled
entrepreneurs and engineers that will help create jobs and grow our economy.”

SEMI
has been working for many years to force implementation of reform in
high-skilled immigration. Long thought to be an issue that was too divisive and
too partisan to achieve meaningful reform, the narrative that has emerged from
last year’s election is that politicians can no longer avoid the need for
comprehensive immigration reform if they hope to ever get re-elected. The shifting demography of the U.S. that was
so apparent in the voting turnout in November 2012 has led policymakers to
believe that now is the time to act.
Central to any reform effort will be the need to change the way to U.S.
attracts and retains high-skilled workers who are so essential to the
semiconductor industry.

Trade

“To boost American
exports, support American jobs, and level the playing field in the growing
markets of Asia, we intend to complete negotiations on a Trans-Pacific
Partnership. And tonight I’m also
announcing we will launch talks on a comprehensive Trans-Atlantic Trade and
Investment Partnership with the European Union, because trade that is fair and
free across the Atlantic supports millions of good-paying, American jobs.”

President
Obama’s call for the launch of a comprehensive transatlantic trade and investment
partnership with the EU is tremendously significant. Already the world’s largest bilateral trading
relationship with an annual value of approximately $650 billion, an
all-encompassing agreement to further reduce barriers to trade and investment would
be significant based on trade volume alone.
However, any agreement would also hold strategic significance, as an
EU-U.S. deal would give rise to a dominant economic alliance that would
strongly influence other nations toward free trade. The Administration hopes to begin
negotiations by June and has set the ambitious goal to conclude talks by end of
2014. This accord would be the most significant since the founding of the World
Trade Organization (WTO) in 1995, with estimates that implementation would
raise the GDP of both economies by one-half a percent per year.

Conclusion

While
SEMI is encouraged by many of the topics that were supported by President Obama
is his address, these efforts still need require much hard work to become the law of the land. That’s why SEMI will continue to work with
the Administration and members of both parties in Congress to implement the
changes necessary to support a strong equipment and materials industry in the
United States. Through the work of the
SEMI Washington, D.C. office, we will continue to advocate for the best
interests of the industry in the nation’s capital.

If
you have any questions regarding SEMI Public Policy or how you or your company
can be more involved, please contact Jamie Girard, senior director, Americas Public Policy, at jgirard@semi.org or 202-289-0440.